The dedicated bankruptcy court has dismissed a petition filed by Gateway Offshore against Pune-based realty developer Runwal Realtors to admit the company under the Corporate Insolvency Resolution Process (CIRP).
The Mumbai bench of the National Company Law Tribunal (NCLT), while rejecting the arguments made by Gateway Offshore in its petition, observed that in absence of any written document indicating the purpose of the transactions between the parties, it cannot be assumed to have been towards a loan.
“A written contract cannot be treated as a prerequisite to proving the existence of a financial debt, the Adjudicating Authority must be satisfied that the corporate debtor is not being dragged into Corporate Insolvency Resolution Process mala fide for any purpose other than the resolution of the insolvency,” said the division bench of Justice PN Deshmukh and KK Vohra in its 10-page order. “In the present matter, there is no evidence to allow or admit present application.”
In its petition, Gateway Offshore had approached the tribunal to recover around Rs 5 crore including interest with the arguments that the Mumbai-based developer had borrowed the amount at 9% interest and it has now failed to repay the dues.
Countering this, the developer had argued that the amount advanced by the petitioner firm was not a loan but for the purpose of a joint venture. The developer argued that the financial creditor (Gateway Offshore) has disbursed the amount for the joint development of a land parcel owned by the Runwal Realtors and said that originally the petitioner company were liable to contribute Rs 17 crore.
Accordingly, the corporate debtor has raised a counterclaim for the remaining amount.
However, if the lender chooses to challenge the ruling, the higher court will have to determine the issue of nature of the debt first, feels legal experts.
“The financial creditor may exercise available remedies however the appropriate court whilst determining this issue will need to delve into the nature of the debt, whether admitted or needs to be adjudicated, validity of the conformation of accounts provided by the company to the lender and ascertain the interest provided therein if any,” said Priyanka Sinha, partner of the law firm A&P Partners.
The tribunal, while ruling in favour of Runwal Realtors, observed that the financial creditor has failed to bring on record any other evidence in the form of a loan agreement, promissory note, contract or any document to substantiate its claim that there was a financial debt and a default of the same.
“The financial creditor has produced the corporate debtor’s annual reports for the financial years 2016-17 and 2017-18. However, the same does not reflect any debt due specifically to the financial creditor,” observed the tribunal in its order of June 10.
According to the tribunal, the financial creditor, in this case, has placed
on its bank statements and confirmation of accounts of the corporate debtor that reflect transactions between the parties. However, in absence of any written document indicating the purpose of the said transactions, it cannot be assumed to have been towards a loan as claimed by the financial creditor.
